“Exporting Profits” reveals sharp increase in profits among biggest corporations, enriching primarily American shareholders

EDMONTON – The Alberta Federation of Labour (AFL) today released a new report, Exporting Profits: Alberta oil and gas workers fall behind while American shareholders thrive, which shows that Canada’s biggest oil and gas companies enjoyed a massive increase in profits during the boom years of 2021 to 2023 and yet the largest portion of the money went to shareholders, primarily American. Over the same time period, Alberta workers saw their share of the value generated by the oil and gas industry dramatically decline.

Today’s report is the result of a research study conducted by Canadians for Tax Fairness on behalf of the AFL.

“This is a report that reveals two truths about the Alberta economy that we can’t afford to ignore,” said Gil McGowan, president of the AFL. “First, it shows that our biggest industry — oil and gas, dominated by the oil sands — has entered a sunset phase. In all likelihood, the sector will never again be the engine for investment, economic growth or job creation that it once was. Second, and just as significantly, our report shows that the vast majority of the benefits from the oil sands’ final harvest are being reaped not by Alberta workers or Alberta citizens — the real owners of the resource — but by foreign investors, mostly wealthy Americans.”

The new report shows that from 2021 to 2023, the oil and gas industry made $135.2 billion in operating profits. This is a major jump from the previous boom years, 2011 to 2014, during which the industry collected $64.2 billion in operating profits. What is even more striking — and concerning — is that the share of money going to workers has dramatically declined. During the 2011-2014 oil price boom, the workers’ share of the total value created by oil and gas was 52%, which plummeted to only 24% during the 2021-2023 boom.

“In our report, we look at the trajectory of the industry over the past fifteen years in terms of investment, jobs, production, revenue for governments and profits for shareholders,” said McGowan. “We also look in detail at what the industry was doing during the two most recent periods of high oil prices — 2011 to 2014 and 2021 to 2024. Even though our oil and gas industry is recording record profits and hitting record production levels, it’s employing 30,000 fewer people than it did ten years ago — and that doesn’t even include the 900 layoffs announced recently by Imperial Oil.”

Most Canadian corporations are majority-owned by Canadians, but it’s a different matter in the energy sector. The four biggest oil and gas companies that were the primary focus of this study — Canadian Natural Resources (CNRL), Cenovus Energy, Imperial Oil, and Suncor Energy — are an average of 60% American-owned and only 27% Canadian owned.

Why was the recent oil and gas boom so much less beneficial to workers than previous booms? The study shows that the “big four” invested $12 billion less per year during the recent boom than during the 2011-2014 boom, while profits were higher. The higher profits have gone in large part toward higher dividends and share buybacks; an estimated $58 billion in dividends and stock buybacks were paid out to foreign shareholders from 2021 to 2024.

“The UCP government has put a lot of time and effort into lobbying for oil and gas to become even more profitable, but the wealth has bypassed most of us here in Alberta,” said McGowan. “Rich American shareholders have never fared better while Alberta workers are left with the crumbs from the table. This is not responsible economic management. It verges on theft. These resources belong to us, not to the United States.”

“Exporting Profits” makes four recommendations:

A new mission-driven industrial policy
Rather than increasing our reliance on industries that have contributed the most to climate change, the public sector must invest in projects that will benefit Albertans and Canadians economically, and environmentally, for decades to come. These could include constructing a national electricity grid, electrifying transportation, using hydrocarbons to produce materials, or developing a sustainable fuels industry.

Conduct a review of Alberta’s royalty framework
The last royalty review, completed in 2016, recommended four guiding principles for Alberta’s royalty framework: 1) optimize returns to Albertans, 2) attract investment and promote job creation, 3) support downstream value-added industries, and 4) encourage environmental responsibility. With the hindsight provided by the COVID-19 pandemic and the oil price boom, it is time to revisit whether Alberta’s royalty framework is accomplishing these guiding principles.

Restore Alberta’s corporate income tax rate to 12%, its level from 2015-2019
Alberta currently has by far the lowest provincial corporate income tax (CIT) rate, at 8%. No other province has a rate lower than 11.5%. Research has consistently shown that lower CIT rates do not stimulate investment. Instead, they simply allow corporate owners to keep more of their profits and reduce public revenue. Increasing Alberta’s CIT rate would bring the industry’s tax level more in line with the rest of Canada’s economy.

Implement a permanent windfall profits tax
The post-pandemic inflation surge demonstrated how our economic system can be exploited by large corporations during crises. Large corporations were able to use the disruptions created by the pandemic to raise prices and increase their profit margins, at everyone else’s expense. Canada should implement a permanent windfall profits tax that could be triggered during future crises to ensure corporations cannot profit from crises like they did during the pandemic.

“It is unacceptable that our biggest oil and gas companies are paying lower effective tax rates than average, hard-working Albertans,” said McGowan. “They can’t be expected to curb their greed on their own. Government must step in.”

Download Exporting Profits [LINK]. Learn more on the Diversify Alberta website [LINK]

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MEDIA CONTACT:
Laurence Miall
Director of Communications and Campaigns, AFL
Email: lmiall@afl.org

REPORT HIGHLIGHTS

• The four biggest corporations operating in the Alberta oil sands are Canadian Natural Resources (CNRL), Cenovus Energy, Imperial Oil, and Suncor Energy, which had a record 2.8 million barrels per day of oil sands production in 2024, over 80% of total oil sands production.
• Compared to other Canadian industries, a far greater share of the value generated by the oil and gas industry goes to profits and far less goes to workers. Across the 2021-2023 time period, 76% of the net value added of the oil and gas industry went to owners as profits and only 24% went to workers. In the rest of the non-financial sector, only 26% of net value added went to profits and 74% went to workers.
• Worker compensation declined from $17.4 billion annually during 2011-2014 to only $14.3 billion during 2021-2023
• Among the 28 Canadian industries with at least $10B in profits over 2021-2023, only real estate and agriculture had a lower effective tax rate than the oil and gas industry. Over this period, the oil and gas industry had an effective tax rate of 14.3%, meaning the industry paid only 14.3% of its profits in taxes. As a whole, the non-financial sector had an effective tax rate of 19.1% over this period.
• On average, according to Statistics Canada, 14.7% of Canadian corporate assets are owned by foreigners, including 7.7% of assets which are owned by Americans. For the oil and gas industry, the rate of foreign ownership is more than double the average of the rest of the Canadian economy. A full 36.5% of oil and gas assets are foreign owned, including 15.6% owned by Americans.
• Foreign ownership is even higher among “the big four” oil sands companies. The estimates in this report show that these four companies are on average 73% foreign owned — and 60% American owned.